“Best Price Guarantee” is an advertising tactic commonly used by retailers to assure customers that they are offering lowest possible prices.
In the seminar on “Introduction to Strategic Thinking and Game Theoretic Analysis in Economics” hosted by Fulbright School of Public Policy and Management, Professor Kajii Atsushi analyzed underlying game theories in above marketing tactic and other daily life activities.
Game theory is a powerful analytical tool in which a player thinks strategically to ensure best possible profits for oneself while counter-parties also act rationally for their own interests.
In strategic analysis, players aim towards a Nash equilibrium – a balanced strategic state when each party acts for their best possible outcomes.
Game theory has been very successful in economics, social sciences and particularly public policy.
In the seminar, Prof, Atsushi asked students to play a card games during which each player must think strategically to decide their optimal contribution and simultaneously secure their victory in the game.
Through this exciting game, Prof. Atsushi proved the proposition that when each player acts selfishly for their best interests, socially best scenarios will not achieve.
As such, the government and policy makers are responsible for devising policies to incentivize individuals’ contribution and maximize social interests.